Frankie And Johnny Were Sweethearts, Well Not Exactly

In bringing to a close yesterday six years of investigation and litigation, and more than $800 million worth claims by state shipping company Sovcomflot, Justice Andrew Smith of the UK High Court has issued two batches of rulings, totaling 478 pages of findings of fact and judgements of law. Together, they represent the most thorough due diligence ever attempted and published of a Russian state company, or of an international shipping company for that matter. Justice Smith ruled that Sergei Frank had been the principal orchestrator ("largely responsible") of the entire campaign, and that it had failed because Frank himself had been dishonest, because he had procured evidence corruptly by bribing individuals, including Sovcomflot group employees, to testify falsely, and because the three defendants who were targeted by the litigation - Dmitry Skarga, former chief executive of Sovcomflot; Tagir Izmaylov (Izmailov), former chief executive of Novoship; and Yury Nikitin, former chartering partner of the two shipping companies - were not guilty of , nor liable for, what the judge called the "central allegation in the Fiona actions of dishonest collusion between Mr. Nikitin and Mr. Skarga and in the Intrigue action of dishonest collusion between Mr. Nikitin and Mr. Izmaylov…that was always their real and primary case….the claimants' primary contentions of corrupt conspiracies were pursued almost entirely on the basis of dishonest evidence." In short, Frank pulled a frame-up.

In December, the judge had also ruled that if Sovcomflot had taken its allegations and claims to a Russian court under Russian law, there would have been "formidable, and in my judgement insuperable difficulties". In addition, Judge Smith ruled: "the defendants [Skarga, Izmaylov, Nikitin] would be protected by different limitation periods, which appear generally to be more favourable to them [in Russia] than those available under English law."

Out of the mass of proceedings, the judge identified the boomerang which Frank tossed against his enemies, only to strike himself. For bribery to be proved in a Russian court under Russian law, Justice Smith ruled that Russian law would have been more favourable to the defendants than to Sovcomflot. "In so far as the claimants [Sovcomflot] might seek to rely upon a claim in bribery because, under English law, it is presumed that the bribe influenced the recipient to enter into relevant transactions or to cause the principal to do so, any issue about Mr. Skarga accepting a bribe would be governed by Russian law, and the claimants would not be able to rely upon this presumption. They would have to prove influence and causation, and they have not done so."

In dismissing the core allegations under British law, the judge has made clear he was restricted to ruling on the civil law issues before him. In a line that has gone almost unnoticed in the March 24 judgement, Justice Smith added: "the defendants alleged that these investigations [by Frank] involved unlawful and illegal activities in different countries, including the United Kingdom, but I did not need to determine that."

How far Frank has gone in breaking the criminal law of the UK was not for Justice Smith to decide. But his rulings leave open the possibility that others may review in this light the High Court judgements that Frank testified falsely himself (perjury); and that he bribed others to testify falsely (conspiracy to pervert justice).

When Frank began his testimony at the High Court in London last October, he refused to swear an oath, claiming it was against his religious conviction. "Simply because I spoke with my — with my priest in Russia. So I have a priest, and actually I discussed this issue with him, and I decided that it will be more appropriate [not to swear]. It is my right in the constitution of this country [UK]. Nobody told me that there is a big difference in the legal sense."

Frank is correct - constitutionally, he had the right not to swear the oath, and legally, if he perjured himself, the lack of the oath would not affect his exposure to criminal charges. Even if the British directorate of public prosecutions doesn't go so far, the UK stock market regulator and Listing Authority are bound to review the evidence of the case to judge whether, in the sale of company bonds or shares, Frank's position on the Sovcomflot board of directors is tenable, according to the fitness criteria. A source close to the case says: "I would have thought that a finding by a High Court Judge that a person was dishonest, had lied in court and may have attempted to pervert the course of justice ought to preclude such a person from being considered a due and proper person.

For a Russian of Frank's rank to have been judged so severely is unprecedented. Sovcomflot's only statement, issued late Thursday evening, does not refer to the judgement on the chief executive at all. Said his London spokesman Bill Spears, Frank "will not be adding anything to the remarks already included [in the press statement]." That statement noted that the judgement "has resulted in total compensation due to the Claimants, including applicable interest, of approximately USD 60 million". It ignored the dismissal of $700 million in claims; the judgement against Frank; and the pending lawsuit by Nikitin for compensation of $180 million stemming from the 6-year freeze order Sovcomflot took against his assets. Sovcomflot's statement admits no wrongdoing on the company's part or of its employees; it repeats the claim "of the wrongdoing of some of the Defendants", and expressed "disappoint[ment] as to the extent of the Judge's findings regarding the wrongdoing of the Defendants and the allocation of costs."

Nicholas Fairfax, a marine insurance agent whom Frank promoted to a senior company manager in London after Skarga refused, fumbled his English when he said, according to the company release, "today nobody has any doubt that the SCF Group had been the subject of serious fraud. Cases involving fraud and corruption such as this are highly complex." Fairfax has muddled subject and object. Justice Smith didn't.

For the duration of the case, Frank has also managed to confuse public understanding of the case, partly by insisting on the veracity of claims through a succession of London PR agents; and partly by deterring independent investigation of the claims by threatening libel action in the UK courts. In June of 2005, when Frank first briefed the London maritime media with his allegations against Skarga, a plan of action was discovered to defame this correspondent by two English public relations executives working at Bell Pottinger for Sovcomflot. Frank was warned to stop by London solicitors acting for me.

In 2006 Frank initiated a threat of libel litigation in London by a lawyer named Rupert Earle, then working for the firm of Addleshaw Goddard. Notwithstanding substantial documentary evidence to substantiate the published reports, Frank claimed that I showed "a certain bias against Sovcomflot" and a "lack of understanding" of the Sovcomflot group's management practices. He insisted directly and through his lawyer that his version of the facts was the believable one, and that this should be published. It was.

In October of 2009, as the London trial got under way, Frank criticized me in court, and a week later, ordered Sovcomflot to file at the Russian Foreign Ministry a challenge to my accreditation status in Moscow. The Foreign Press Centre of the ministry issued a formal assurance: "We are not going to involve the Foreign Ministry in [the Sovcomflot trial]. We are not threatening anyone. We are trying to solve a purely technical issue….we agree that you have not violated your status as a correspondent."

Earle was ordered to return to the offensive after the December 10, 2010, ruling by Justice Smith went against Sovcomflot, and Frank was cited in the judgement as an unreliable witness. On January 18, 2011, now working for a law firm called Bates Wells & Braithwaite, Earle was instructed to accuse me of "obsessive prejudice". Earle also threatened to bring a charge of contempt of court after this despatch— published in the US as is this entire website — appeared at a time Frank and his lawyer believed to be in advance of the court embargo time in London.

The judgement of the High Court against Frank now applies retrospectively to the entire period in which he was directing the London court case. So Earle was asked whether he knew, or under the UK Bar rules he had a duty to know, whether the claims and threats Frank had issued against media reporting in general, and mine in particular, were based on evidence that was fabricated, false, dishonest. Earle put down the telephone rather than respond. Take it away, Sam.